CFA Level I · CFA Level I Exam · Investors and Other Stakeholders
A founding family holds 55% of the voting shares of a listed company through a dual-class structure while owning 20% of total equity. It approves a related-party contract at above-market prices with a family-owned supplier. This conflict is best described as one between:
This is a conflict between controlling and minority shareholders. The family uses its voting control to direct above-market business to its own supplier, extracting private benefits while the cost falls on minority owners who have little influence.
- Abondholders and shareholders
- Bcontrolling shareholders and minority shareholdersCorrect
- Cshareholders and the board of directors
Explanation
The family uses voting control to extract private benefits through a related-party transaction, with the cost borne by minority shareholders. It is not primarily a creditor conflict or a management agency problem.
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